MUMBAI: Entry load is finally off the back of mutual fund investors. In a circular, the Securities and Exchange Board of India (SEBI) on Monday said investors will not be charged an entry load while directly applying with a mutual fund. This means an investor will not have to pay the entry load of 2.25% for equity funds unless he avails the services of a distributor.
So, hypothetically, if an investor puts Rs 1,000 in a scheme and the entry load is 2.25%, he would receive units worth Rs 977.5 only (2.25% of Rs 1,000), thereby impacting his investment’s net asset value (NAV). The market regulator felt that the current structure denied investors the entire benefits of
the investment.
“This circular shall be applicable for investments in existing schemes with effect from January 4, 2008 and in new schemes launched on and after the said date,” SEBI said.
“It shall also be applicable to additional purchases done directly by the investor under the same portfolio and switch-in to a scheme from other schemes if such a transaction is done directly by the investor,” it added.
So, hypothetically, if an investor puts Rs 1,000 in a scheme and the entry load is 2.25%, he would receive units worth Rs 977.5 only (2.25% of Rs 1,000), thereby impacting his investment’s net asset value (NAV). The market regulator felt that the current structure denied investors the entire benefits of
the investment.
“This circular shall be applicable for investments in existing schemes with effect from January 4, 2008 and in new schemes launched on and after the said date,” SEBI said.
“It shall also be applicable to additional purchases done directly by the investor under the same portfolio and switch-in to a scheme from other schemes if such a transaction is done directly by the investor,” it added.
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